SEC Pledges to Improve Handling of Investment Adviser Exams

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Andrew Ramonas

The SEC is taking steps to strengthen its systems, policies, and procedures over the completion of investment adviser examinations, according to an inspector general audit report released July 21.

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations agreed with the agency’s Office of Inspector General, which found OCIE internal controls over the investment adviser exam completion process were “generally effective,” but needed improvements, the report said.

OCIE vowed to boost its internal controls to help ensure adequate segregation of duties in the examination process’s intermediate phases in an effort to prevent errors. The office also said it should better articulate staff policies for handling preliminary exit interviews that it uses to discuss preliminary findings with investment advisers and to let them know their next steps in the exam process. Additionally, it plans to release guidance for assigning final examination ratings that help create an investment adviser’s risk profile.

“OCIE appreciates the OIG’s findings that 75 percent of the examination process controls it tested were ‘sufficiently designed and operating effectively’ and that OIG found no deficiencies with respect to OCIE’s investment adviser (“IA”) corrective action reviews,” OCIE acting Director Peter Driscoll said in a response to a draft of the report.

OCIE is responsible for examining approximately 12,000 registered investment advisers. The exams help the SEC fight fraud, enhance industry compliance, and discover risks.

To contact the reporter on this story: Andrew Ramonas in Washington at aramonas@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Securities & Capital Markets on Bloomberg Law